Alternative Fuel Incentives and Law

Louisiana's Alternative Fuel Incentives and Laws

AFV Tax Incentives and Credits

Acts 325 and 403 of the 2017 Regular Session of the Louisiana Legislature made several changes to the tax credit for conversion of vehicles to alternative fuel usage. The purpose of this guidance is to summarize these changes and their implications for taxpayers seeking to utilize this credit.

Changes Effective June 22, 2017

Reduced Credit Amount for Conversions and Fueling Stations

Act 325 permanently reduces the credit from 36 percent to 30 percent of the cost of the qualified clean-burning motor vehicle fuel property being purchased to (1) convert vehicles propelled by gasoline or diesel to an alternative fuel or (2) build fueling stations.

Calculation of Credit Changed for New Motor Vehicle Purchases

For new motor vehicles originally equipped to be propelled by an alternative fuel, Act 325 eliminates the option of determining the exact cost that is attributable to the alternative fuel property. Instead, the amount of the credit for purchases of new motor vehicles is now equal to 7.2 percent of the cost of the qualified motor vehicle or $1,500, whichever is less, provided that the motor vehicle is registered in Louisiana.

New Registration and Use Requirements for Credits for Converted Commercial Vehicles

Pursuant to Act 325, in order to be eligible for the credit for costs associated with converting a vehicle to alternative fuel usage, commercial vehicles must be registered and primarily used in Louisiana for four years after the date of the conversion. For purposes of this requirement, a commercial vehicle is deemed primarily used in Louisiana when 80% of the miles traveled in the four years after the conversion occur in Louisiana.

Qualified Costs for Fueling Stations Clarified

Act 325 clarifies that the costs associated with fueling station infrastructure that are not directly related to the delivery of an alternative fuel into the fuel tank of motor vehicles are not eligible for the credit.

Changes Effective June 26, 2017

Calculation of Credit Changed for New Motor Vehicle Purchases

Act 403 changed the credit for purchases of new motor vehicles to ten percent of the cost of the qualified motor vehicle or $2,500, whichever is less, provided that the motor vehicle is registered in Louisiana.

Changes Effective January 1, 2018

Credit is Classified as Nonrefundable

Act 325 changes the credit to nonrefundable for all purchases of qualified clean-burning motor vehicle fuel property on or after January 1, 2018. Credits for the purchase of qualified clean- burning motor vehicle fuel property made before January 1, 2018, remain refundable.

Sunset Provision

Act 403 provides for a sunset date for the credit of January 1, 2022. Accordingly, purchases made on or after this date will not be eligible for the alternative fuel vehicle tax credit.

State Mandate

Alternative Fuel and Advanced Vehicle Acquisition Requirements:

The Louisiana Division of Administration must purchase dedicated alternative fuel vehicles (AFVs) capable of operating on natural gas or liquefied petroleum gas (propane), or bi-fuel vehicles capable of operating on conventional fuel or natural gas, propane, or any non-ethanol advanced biofuel. State agency vehicles may be granted a waiver if fueling stations are not available within a 25 mile radius, the agency cannot recoup the incremental cost of the vehicle within 60 months, or the available vehicles do not meet agency specifications.

Any AFV a state agency purchases or leases must have a minimum fuel economy of 18 miles per gallon (mpg) for city driving, 28 mpg for highway driving, or a combined city/highway average of 24 mpg. Law enforcement vehicles, certified emergency vehicles, and state agency vehicles with prior written authorization are exempt from this requirement. (Reference Louisiana Revised Statutes 39:364 and 39:1646)

Changes to the Special Fuels Excise Tax - ACT 147:

Act 147 Beginning January 1, 2016, LDR discontinued the annual decal program and instead collect a special fuels tax of $0.16 per gallon equivalent of natural gas at the time fuel is dispensed or delivered into the tank of a motor vehicle based on the special fuel's energy content as follows:

Decals will continue to be issued through Dec. 31, 2015, for vehicles that use special fuels in order for the taxes due on the fuel to be paid. The amount of the decal is being calculated at a rate of one-twelfth of the total annual decal amount for each month the decal is valid. Refunds will be issued starting in January 2016 for renewals & new applications.

Dealers must register with LDR and post a $50,000 bond or an amount equal to 3 months’ tax liability, whichever is greater.

R.S. 47:818.112 requires the tax to be collected by any person or entity upon the delivery of the fuel into the fuel supply tank of a motor vehicle. R.S. 818.112(B) imposes the tax on the delivery of fuel into the supply tank of a motor vehicle by a special fuel fleet dealer or other dealer not in connection with a sale.

The return is due by the 20th of the month.

Licensed dealers are entitled to a 1/3 of 1% discount for the expense of collecting, accounting for, reporting and timely remitting the taxes collected and for keeping records.

For gasoline and diesel--Reduces the administrative discount to supplier for filing returns and remitting payment timely from one and one-half percent to one-half percent and reduces the deduction from 1% to one-third of 1% for licensed distributor or importer. See RIB 15-022.